ONS Notes Retail Sales Decline In May

The latest data from the ONS reveals a decline in retail sales between April and May 2021.

Main points:

• Retail sales volumes declined by 1.4% between April and May 2021 following a sharp increase in April when retail restrictions were eased; despite the monthly decline, over April and May combined, average total retail sales volumes were still 7.7% higher than in March 2021, and were 9.1% higher than in February 2020 before the impact of the coronavirus (COVID-19) pandemic.

• The largest contribution to the monthly decline in May 2021 came from food stores where sales volumes fell by 5.7%; anecdotal evidence suggests the easing of hospitality restrictions had had an impact on sales as people returned to eating and drinking at locations such as restaurants and bars.

• Non-food stores reported a 2.3% increase in monthly sales volumes in May 2021 with household goods stores (for example, hardware and furniture stores) and “other” non-food stores reporting the largest growth of 9.0% and 7.7% respectively.

• The large increase in sales volumes in April, followed by a relatively small fall in May, has resulted in the volume of sales for the three months to May 2021 being 8.3% higher than in the previous three months; there was strong growth in automotive fuel sales and non-food retailers of 19.3% and 17.8% respectively.

• The proportion of retail sales conducted online remains substantially higher than before the pandemic, but in May all retail sectors, with the exception of food stores, reported a fall in their proportions of online sales as consumers returned to physical stores; the total proportion of sales online decreased to 28.5% in May 2021, down from 29.8% in April 2021.

• In comparison with February 2020, the value of total online retail sales in May 2021 was 58.8% higher, whereas in-store sales were 1.3% lower.

• Retail sales volumes in May 2021 were 24.6% higher than in May 2020, which was affected by the first national lockdown when the tightest restrictions were in place; however, these growth rates are distorted by base effects and are not a reliable guide.

British Retail Consortium Comment

Responding to the latest ONS Retail Sales Index figures, which showed a 22.3% year-on-year increase in overall sales (non-seasonally adjusted retail sales excluding fuel: J3L2), Helen Dickinson, Chief Executive of the British Retail Consortium, said:

“The third month of rising sales will be welcomed by retailers who are still recovering from months of lockdown during which many were unable to open stores. The reopening of hospitality provided additional impetus for many of us to hit the streets, particularly as the summer weather begun to kick in. Retailers reported an increase in purchasing over browsing, suggesting shopping trips were becoming more purposeful. Furniture and floor covering sales continued to perform well, as consumers took the opportunity to try things in-store, while even clothing and footwear saw continued growth thanks to the warmer weather and easing of restrictions on meeting friends and relatives. Consumer confidence appears to be rising fast thanks to both the widespread vaccination and testing programme and the extensive measures take by retailers.

“Challenges remain. Many retailers built up considerable debt, including from rents, during the periods of lockdown, and will be relying on continued consumer demand to trade their way out. Those based in larger cities have also been hardest hit by the fall in footfall, as many city workers continue to work from home. The changes caused by the pandemic are being bolstered by a fundamental transformation in consumer behaviour which started long before Covid. Internet sales continued to rise, albeit at a reduced pace, supported by the massive investment in digital channels, logistics operations, and click-and-collect options, ensuring UK consumers continue to benefit from a world leading shopping experience whether they are in their homes or their high streets.”

Commenting on the Office of National Statistics retail sales figures for May 2021

PwC Comment

Lisa Hooker, consumer markets leader at PwC, said: “After a bumper April boosted by the release of pent-up demand, it was no surprise that May’s retail sales fell back very slightly from the previous month.

“However, on a seasonally adjusted basis, sales continue to be over 10% higher than before the pandemic in February 2020, and almost all of the decline last month can be attributed to a reduction in grocery sales as hospitality reopened.

“Meanwhile, non-food sales continued their upward trajectory last month, with particularly strong performance from household goods and speciality retail stores, as many of us continue to work from home. This was a particularly creditable performance given the wet and unseasonably cold weather, plus the competition from reopened hospitality outlets, which might otherwise have dissuaded many consumers from venturing out onto the high street.

“More shoppers on the high street also meant that online sales are starting to return to a more “new normal” level: 28.5% online penetration in May was well below the 36% we saw earlier in the year.

“However, the headline figures mask a divergence of fortunes between different retailers. We have already seen that the recovery in footfall is skewed more heavily towards out-of-town retail parks rather than high streets and traditional shopping centres. And footfall will remain depressed until the full lifting of lockdown restrictions, currently postponed until July. While the government’s extension of the rent moratorium this week was welcome, it may have come too late for some retailers.

“The good news is that looking ahead to the rest of the year, the picture remains positive for retail. With consumer sentiment at record highs and foreign holidays still on hold, many people have disposable income to spend. The challenge for retailers is to harness this momentum through the rest of 2021.”

Source : ONS; BRC

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